Invest in North-East Romania – Investor’s Guide (by ADR NE)
THE PROFILE OF NORTH-ESTERN REGION
Although it is the largest development region of Romania in terms of the number of inhabitants and of the area owned, the North-East Development Region is on the last place as a level of development. Intra- and inter-regional disparities increased over the period 2005-2008, although regional gross domestic product, per capita, increased in real terms. From the existing statistical data, the disparity index continued to decline – regardless of the global economic context (both in the period of growth and recession), down from 66.7% (2005) to 61.4% (2010). Relative to the Community average, the North-East Region figured with a disparity index of only 29%. The main factors determining the low level of development of the North-East Region are:
(1) lack of economic opportunities for the rural population:
- 57% (over 2 million people) of the region’s population lives in rural areas;
- of these, more than half a million are employed in agriculture, generally subsistence agriculture;
(2) low competitiveness of the economic environment:
- active enterprises in the Region have a reduced labor productivity, lower than the national average of 30%;
- surprisingly, along with trade and manufacturing, the lowest productivity is registered in communications and information, as determined by the modest contribution made by the research, technological development and innovation sector and by the reduced transfer and the implementation of results by the productive sector;
- the share of R & D expenditures at the regional level accounts for only 0.3% of the regional gross domestic product, which is, in fact, decreasing;
- In addition, out of the total amount of RD spending, only one third is made by SMEs;
- there are many RDI units operating in the region at the level of research institutes, higher education institutions, agricultural stations and economic agents. The development of research and excellence centers within the universities in the region, recognized by the National Council for Scientific Research (12 Centers of Excellence established within the higher education institutions in Iaşi), has been noted in recent years.
- total expenditure in this sector accounted for only 0.29% of the regional gross domestic product (2009), decreasing compared to 2007-2008. At the same time, the largest part of intake was brought by the counties of Iasi and Suceava.
- at the level of 2010, expenditures from public funds were almost four times higher than those of the private sector. It is worth noting that, over the period 2006-2008, the share of expenditures from public funds increased to 86.2%, although during the crisis to drop to 70%.
- Regarding the evolution of the number of employees in the RDI sector, the North-East Region was one of the few regions which in the past registered an increasing trend, reaching 4,172 persons in 2008. As a result of the effects of the economic and financial crisis, the activity of the research units has limited, the number of employees decreasing to 3.376 in 2010. Practically, at the end of 2010 the total number of RDI employees represented only 8.64% of the total existing at national level. At the same time, for every 10.000 civilian employed only 28 employees are recruited from RDI.
- one of the important issues of research in the region derives from the fact that the results obtained do not correspond to the needs of the companies and can not be effectively exploited in production.
- The limited development of IT&C and the low penetration of Internet services (especially in rural areas) are obstacles to the transition to the knowledge economy. Thus, the number of enterprises with services and/or products in the field of IT C represents only 8% of the national total, with a modest contribution to the national turnover on this segment.
- at the same time, only 36% of households have access to the internet, 50% do not have computer equipment, and 50% of the population has never accessed the Internet.
- low economic productivity also leads to a low level of exports, with only 4,3% of the total volume of Romanian exports being provided by the region – most of the companies are addressed by products and services provided to the national market.
- The total number of enterprises with technological innovation (those that have launched new goods or services or significantly improved new processes) in the region represent 13,4% of the existing total at the national level, representing 791 fime. Of these, three-quarters work in the industry and a quarter in services. At the same time, three-quarters are businesses with up to 50 employees, and the rest are medium and large. Analyzing the situation by type of innovation, 48% of them have launched both a product and a new process, 36% a new process, and 16% a new product.
- Given that the economic crisis will continue and aggregate demand and public investment will stagnate, real growth in regional gross domestic product can not be sustained in the absence of interventions dedicated increasing of competitiveness and innovation.
- the low level of attractiveness, especially of rural areas and small and medium-sized towns:
- most of the region’s small and medium-sized cities face a low level of attractiveness due to a complex of economic, social, environmental factors. In most cases, the existing technical town infrastructure is out of date, and the adjacent villages are not connected to utility networks.
- accessibility and mobility within the localities are limited by the high degree of wear of city streets, the lack/deficient of parking space, the lack of alternative forms of transport (bicycles, ecological transport, etc.).
- the low level of private investment made and the effects of the economic and financial crisis have led to a reduction in existing jobs. The lack of attractive job and leisure opportunities leads many graduates to establish their domicile in other more developed urban areas.